Is the 4% Rule Dead?
BiggerPockets Money Podcast
Intro
This chapter explores the 4% rule, a financial strategy for determining retirement savings needs. It highlights historical investment performances and the rule's resilience during economic downturns, emphasizing its significance for achieving financial independence.
Is the 4% rule dead? Most FIRE-chasers are using this retirement rule completely wrong, and it could cost them their financial freedom. With stock prices falling and many Americans fearing another recession, now is the time to tighten up your retirement portfolio and ensure you can survive if stock prices correct or crash. If you get this wrong, you could delay your FIRE for years or have to go back to work mid-retirement.
The 4% rule is one of the most bulletproof retirement formulas. It’s simple: Build a portfolio from which you can comfortably withdraw 4% annually. Need $40,000 per year to live? Your FIRE number is $1,000,000. Need $100,000 per year? Then you’re looking at $2,500,000. This math has been checked, double-checked, and triple-checked to withstand even the greatest economic depressions. However, most people have their portfolio set up WRONG, and it could put them at significant risk.
So, how do you ENSURE you can retire (early) with the 4% rule? What hedges should you make in your portfolio so your wealth stays afloat even as the economic tide starts to turn? What are Scott and Mindy doing now to prepare for a rocky stock market? Don’t miss this one—it could cost you your FIRE!
In This Episode We Cover
The 4% rule explained and whether it still works in 2025 and during market downturns
Why your FIRE portfolio is WRONG, and it could be at massive risk right now
How to prepare for an economic downturn to ensure you stay FIREd or on the path to FIRE
What Scott is selling and buying right now to protect his wealth (will his strategy work?)
Alternatives to the 4% rule that will protect your retirement portfolio even during the greatest of depressions
And So Much More!
Links from the Show
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(00:00) Is the 4% Rule Dead?
(04:39) You CANNOT FIRE with This
(11:42) How to Prepare for Downturns
(21:12) Assets That Are At Risk
(23:17) What Scott’s Buying/Selling
(28:29) Alternatives to 4% Rule Portfolio
(34:21) Do You Trust the 4% Rule?
Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/money-619
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